Depreciation Calculator: Companies Act, 2013 vs Income Tax Act, 2025
Indian companies keep two separate depreciation schedules for the same asset: one under Schedule II of the Companies Act, 2013 for the financial statements, and one under Section 33 of the Income Tax Act, 2025 for computing taxable income. This page explains both, and includes a free calculator that builds a year-by-year schedule under either regime.
Companies Act, 2013 (Schedule II): depreciation is based on an asset's useful life in years, using Straight Line (SLM) or Written Down Value (WDV) method, residual value usually capped at 5% of cost. Income Tax Act, 2025 (Section 33, formerly Section 32 of the 1961 Act): depreciation is based on a fixed WDV rate per block of assets (5%–40%), with a 50% rate in the first year if the asset is used for less than 180 days. The two schedules are computed independently and routinely diverge, which is why companies recognise deferred tax.
Companies Act vs Income Tax Act: the key differences
| Companies Act, 2013 (Schedule II) | Income Tax Act, 2025 (Section 33) | |
|---|---|---|
| Purpose | Financial statements — a true and fair view of profit | Computing taxable income |
| Basis | Useful life of the specific asset, in years | Prescribed WDV rate for the asset's block, in % |
| Unit of computation | Asset by asset (or a group of similar assets) | Block of assets — all assets of that class pooled together |
| Method | Company's choice: SLM or WDV, applied consistently | WDV only, for virtually all assessees |
| Residual value | Typically not more than 5% of original cost (can differ, with disclosure) | Not applicable — block value can approach zero |
| Part-year use | Pro-rata based on the actual period the asset is used | Full rate if used ≥180 days in the year of purchase, else 50% of the rate |
| Governing reference | Schedule II, Companies Act, 2013 | Section 33 (Income Tax Act, 2025) and the rate table in Appendix I |
Because the two schedules diverge, the depreciation actually charged in the books rarely equals the depreciation allowed for tax. That timing difference is exactly what deferred tax assets and liabilities under Ind AS 12 / AS 22 are built to reconcile.
Build a depreciation schedule
Pick the regime, an asset category, the cost and the date the asset was put to use. The schedule below is generated in your browser — nothing is sent anywhere.
Illustrative only. Companies Act figures assume the entered residual value and pro-rata for part of the first year. Income Tax Act figures assume this is the only asset in its block, which is a simplification — in practice, tax WDV is computed on the pooled block, not a single asset. Statutory rates shown are the common, currently applicable rates as of publication; always confirm against the current Act, rules and your own facts, or ask us. "Age" and "Remaining useful life" are shown to two decimal places, not rounded to the nearest year. Remaining useful life is shown as — under the Income Tax Act, since WDV block depreciation isn't based on a defined useful life in years.
Schedule II useful life – common asset classes
Part C of Schedule II lists useful life for dozens of specific asset classes across industries (power, steel, ships, telecom and more). These are the classes most Axium clients ask about; for anything not listed, the full Schedule or a professional opinion is the right reference.
| Asset class | Useful life |
|---|---|
| Building – RCC frame structure | 60 years |
| Building – other than RCC frame | 30 years |
| Factory building | 30 years |
| Temporary structure | 3 years |
| Plant & Machinery – general rate | 15 years |
| Continuous process plant | 8 years |
| Furniture & fittings – general | 10 years |
| Office equipment | 5 years |
| Computers & data processing – servers & networks | 6 years |
| Computers & data processing – end-user devices | 3 years |
| Motor vehicles – other than for hire | 8 years |
| Electrical installations | 10 years |
Income Tax Act WDV block rates – common blocks
Since the amendment effective 1 April 2017, the maximum tax depreciation rate for any block is 40% — older references to 50%, 60%, 80% or 100% blocks (for items like pollution-control or energy-saving equipment) are outdated. Goodwill has not been a depreciable asset since FY 2020-21.
| Block | WDV rate |
|---|---|
| Building – residential | 5% |
| Building – non-residential (factory, office, godown) | 10% |
| Building – purely temporary erections | 40% |
| Furniture & fittings | 10% |
| Plant & Machinery – general rate | 15% |
| Motor vehicles – not run on hire | 15% |
| Motor vehicles – run on hire | 30% |
| Computers, including software | 40% |
| Energy-saving / pollution-control / renewable-energy devices | 40% |
| Ships | 20% |
| Aircraft | 40% |
| Intangible assets (know-how, patents, trademarks, licences) | 25% |
Additional depreciation of 20% of cost is available on new plant & machinery acquired and installed by a manufacturing or power generation/transmission/distribution business (35% for eligible new undertakings in notified backward areas of Andhra Pradesh, Bihar, Telangana and West Bengal). It excludes second-hand machinery, office appliances and vehicles, and is halved if the asset is used for less than 180 days in the year of purchase.
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Frequently asked questions
Why do companies need two different depreciation schedules?
The Companies Act, 2013 (Schedule II) governs depreciation in the financial statements, based on an asset's useful life. The Income Tax Act, 2025 governs depreciation for computing taxable income, based on prescribed written-down-value rates applied to a block of assets. The two rarely match, which is exactly why companies recognise deferred tax.
Should I use SLM or WDV under the Companies Act?
Either is permitted under Schedule II. Straight Line Method (SLM) charges an equal amount each year. Written Down Value (WDV) charges a higher amount early and less later, on the asset's reducing book value. The choice is a management policy decision, applied consistently and disclosed in the financial statements.
Does the Income Tax Act let me pick SLM instead of WDV?
No, other than for undertakings engaged in generation of power that opted for SLM under the erstwhile rules. For virtually all other businesses, tax depreciation under the Income Tax Act is computed only on the Written Down Value of the relevant block of assets.
Is this calculator a substitute for a professional valuation or CA opinion?
No. It is an illustrative planning tool using standard statutory rates and a simplified single-asset, single-block assumption. Actual useful life can differ based on physical condition and usage, and actual tax depreciation is computed on the full block of assets, not one item in isolation. For a defensible useful-life determination or valuation report, engage a Chartered Engineer or IBBI Registered Valuer.
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